The discussion addressed the myth of Chinese capitalism.
In the Webcast, which was recorded earlier this week (July 9), the speaker highlights six main points:
a) Chinese capitalism is shorthand for economic reform. The country did have very real economic reform, which is the reason for its tremendous surge in growth and the rise in living standards throughout the country that went on for many years. That reform has now stalled if not outright stopped. It has been so particularly over the last five years under the leadership of president and party secretary, Xi Jinping
b) The myth is that there’s no capitalism at all. It only exists for the party. China has a significant number of private entrepreneurs and private enterprises that have been doing well over the past decade. But there has been a reversal in their status. They will really only function with the goodwill of the Chinese Communist Party. Now every successful Chinese private entrepreneur knows that if they reach a certain size and level of success, they have two responsibilities: the first is the traditional responsibility of making money while the second is a political obligation to ensure that their corporate goals align with those of the Chinese communist party.
c) The status of the Chinese migrant is in contrast to the capitalism of China. There are 300 million migrants, and their families in rural China are another 300 million. China will continue to grow its middle class under its present system. But the same system, built into the Chinese economy, ensures that the migrants and their rural cousins are in effect second class citizens. This prevents them from becoming part of a future middle-class in China.
d) There is a duality in China. A great irony of the communist revolution in China, not always recognized, is that going all the way back to the Mao era, a system was put in place that divided China into two major classes – the urbanites and migrant workers. The urbanites were important for Mao’s goal of industrialization while the migrant workers were simply ignored and underutilized. It is their hard work and low wages that has made China an economic powerhouse. But it enriched only the coastal elites, at the expense of the migrant worker.
e) Chinese education system is still very tightly controlled by the party. Under Xi Jinping, it has become more tightly controlled, less access to information, a stronger firewall to block out what is perceived as unfriendly or unwelcome information. There is a growing emphasis on teaching ideology at younger ages. Primary school children are learning Xi Jinping slogans, and memorizing various party slogans.
f) There is real pride in the people who would like to see China take on a much larger role. But that role and the belligerent version seen around the world, is alarming to countries everywhere, including India, and defined by Xi Jinping and the senior members of the communist party.
g) The Chinese Communist Party and the People’s Liberation Army work in tandem.
h) For years, Shanghai and Shenzhen have been built to become viable alternatives to Hong Kong. The progress, has been very slow. It’s difficult to have a flourishing stock market when much of the financial system through the banks are state-controlled, with strong capital controls because of the concern about capital flight out of the country.
It will be a while till Shanghai or Shenzhen play a real role, or replace a market like Hong Kong.